Friday, August 3, 2007

Case Law Development: Division of Increased Value of Separate Property in Missouri Explained

The Missouri Court of Appeals reviewed the division of the increased value of several pieces of real property that were Husband's separate property in an opinion that nicely demonstrates the operation of the "proportionate share" approach to dividing increased value. 

The case involved a couple who were divorcing after thirteen years.  They had entered into a antenuptial agreement before the marriage that declared that each party would keep their separate property as separate; however, Husband failed to plead the antenuptial as an affirmative defense so that the court of appeals held that the trial court had erred in allowing the agreement to be introduced into evidence.

The properties at issue included some unimproved land Husband had owned before the marriage and an additional parcel of land he inherited during the marriage.  Under Missouri law, property owned before marriage or acquired by gift, bequest or devise is separate property.  However, Missouri also applies the rule that income from separate property is marital and the the increase in the value of separate property may be considered marital to the extent it is the product of marital contributions.  The trial court had held that the entire equity of both parcels was marital property because of improvements that were financed by rental from the properties and loans paid by marital funds.  However the court of appeals reversed the trial court's calculation, noting that the increased value that is marital should be determined by a percentage reflecting the ratio of marital contribution to total contributions. 

The case provides detailed financial accounting for each item of property and would make an excellent exercise for students in considering the various approaches used to divide increase in value.

Holman v. Holman, 2007 Mo. App. LEXIS 1073 (July 26, 2007)
Opinion online (Last visited August 2, 2007 bgf)

http://lawprofessors.typepad.com/family_law/2007/08/case-law-deve-5.html

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